The recovery and the election

That 2004 feeling

Will America’s recovery come through fast enough for the president?

WITH an election less than a year away and the structural headwinds holding back job growth, time is not on the president's side.

Or so this newspaper warned in October 2003. The fact that George Bush junior went on to be re-elected may be encouraging for Barack Obama. Job growth in the current recovery has been shockingly weak, but the same was true of the previous two recoveries. The turnaround came too late to save the job of George Bush senior. But his son fared better. Employment continued to fall for nearly two years after his recession ended in November 2001, but reversed direction in time to save his job (see chart).

Could Mr Obama enjoy the same late boost? On January 6th the government reported that employment had risen by 200,000 in December compared with November, the best gain since April, corroborating a cluster of other reports that show an economy picking up steam. As in previous months, cuts by state and local governments held back the total, but those cuts are, finally, diminishing as receipts to state coffers start to rise again. The unemployment rate, meanwhile, has fallen half a point in the past three months, to 8.5%, the lowest since early 2009.

The news isn't quite as good as it looks. Package delivery companies added 42,000 employees, a large proportion of whom were no doubt sacked once the online holiday shopping season ended. Construction payrolls rose 17,000, mostly because of unusually mild weather. The fall in the unemployment rate is also due in great part to strangely low growth in the labour force, a troubling sign for the underlying vigour of the economy. Monthly job growth averaged 142,000 in the second half of 2011, which is probably closer to what can be expected for 2012. The economy still faces the problems of heavily indebted consumers, moribund home sales, and fiscal austerity at all levels of government. But all these things are, at the margin, getting better, rather than worse.

Whether this will change Mr Obama's fortunes in time for the election is another matter. Employment is climbing out of a far deeper hole now than in 2004, and there's almost no chance the unemployment rate will be below 7.3% come November, said to be the historical dividing line between winning and losing incumbents.

But Tony Fratto, a spokesman in Mr Bush's administration, says the raw data matter less to voters than their personal sense of whether things are getting better, for example if a friend leaves a job for a better opportunity, rather than because he was fired. Government data show that the proportion of people who leave a job because they quit is growing, and now exceeds the share who leave because they are sacked, by a widening margin.

In 2004 Mr Bush could tout his credentials on battling terrorism even if the economy was lacklustre. Now, the economy swamps all other priorities, even the killing of Osama bin Laden. Mr Obama will have little to boast about if the recovery fizzles out; but his opponents will have even less to say if it continues to gather speed.